Occupancy Audit and Cost Recovery Services

Cost Recovery Group Audit Process

CRG Audit Services Include the Following Areas:

Common Area Maintenance [CAM] - Landlord’s costs for operating the office building or shopping center. Leases vary widely regarding which of these costs may be passed along to you. We verify that only expenses allowable per your lease are included.

Real Estate Taxes - We verify that only the correct parcels are included in landlord’s calculation.

Pro Rata Percentage - The ratio of the square footage of your space to one of a number of possible shopping center or office building total square footage denominators. We check that the correct denominator is employed by the landlord.

Percentage Rent - A stipulated percentage of your gross sales over and above a threshold amount. There are many allowable offsets to your gross sales number. This cost is unique in that the calculation is prepared by you and not by the landlord. A percentage rent audit may be deemed performable where the relationship with your landlord is determined to be too delicate to perform an audit of other expenses.

Minimum Rent - We verify that increases were taken timely and in the correct amount.

Construction Allowances - Offered by the landlord to offset the cost of the initial fit out for a store or office or for a remodeling. We check that the full amount of the allowance has been recovered.

The Audit Approach

Initial Interview - To enable CRG to properly set the scope of its work we conduct an in-depth interview with the client. At this interview we establish the auditee selection criteria. Certain key questions regarding things to be examined must be answered before work can commence. For example, are the charges at a particular location felt to be suspect? Is a landlord thought to be systematically passing along improper charges? Is the proposed audit a routine review of all locations? Of equal importance are things to be afforded delicate treatment or avoided outright. Is the audit situation with a particular landlord sensitive because of prospective deals for future locations? Are there any known issues with a landlord that are to be excluded from the audit’s scope? Are any locations to be excluded from the job?

Audit Period - The number of years of payment history to be reviewed by CRG has to be set. We recommend that a period of at least five years be selected.

Audit Site - Where will the audit be performed

Client’s Office - Audits of Landlord’s invoices are performed at the client’s offices or off-site at our offices as warranted by the circumstances of the job.

Landlord’s Office - Audits of Landlord’s invoices and payments are performed at the landlord’s offices.

Selection of which audit is to be performed is based on our preliminary review of the client’s records and on our preliminary conference with the client. Under certain circumstances an audit at the Client’s Office may lead to a follow-up review at the Landlord’s office.

The Audit Process

Initial Interview

Location[s] Selection

Which locations of which landlords will be audited. Based on the auditee selection criteria established at the initial interview the store/office sites to be audited are identified.

Recommendation of Audit Type

Bench Audit at the client’s office or CRG’s office - For audits restricted to the summary billings received from the landlord.

Field Audit at the landlord’s office - For audits of underlying invoices and payment records available only at the landlord.

Performance of Audit

Preparation of Audit Report

Our audit reports vary from a simple claim letter for a bench audit to a thorough description of work performed and audit findings for a field audit.

Issuance of Audit Report

Once the report is approved and signed by the client it is sent to the landlord for processing.

Audit Follow-Up

Submitted claims are only rarely agreed to by the landlord without question. CRG handles all inquiries, attempts to resolve all issues and negotiates the final settlement if necessary.